Thursday, October 1st, 2009
If you’re like most people, being on the opposite end of a collection call can be quite a defeating interaction. Collectors generally seem unforgiving and absolutely unwilling to hold a civil conversation. This all makes it very difficult to make any progress (let alone get the upper hand) during one of these calls. Nonetheless, it’s been my experience that when you equip yourself with the correct tools, controlling the outcome of a collection call can be very easy.
1. Collectors are trained to toy with your emotions for a very specific reason.
Do you ever wonder why collectors act so merciless about your situation and further, why they seem to go out of their way to embarrass and degrade you? The answer is simple, yet often overlooked. Collectors are specifically trained that the fastest way to get a person to pay is to exhibit behavior of such disgust and ruthlessness that the person simply says, “I cannot deal with this human anymore, I will pay them just to go away!”. If you keep this mind, these tactics will become transparent and ineffective.
2. Asking to speak to a manager will get you nowhere.
It’s important to realize that a “manager” at a collection agency (at least the ones that they’ll ever let you speak you), are not really there to make sure their collectors are treating customers fairly. Rather, the managers are there to make sure the collectors are getting you to pay –because, of course, that’s how they get paid. If anything, the manager will treat you even worse. Also, why do you think they are manager? Likely, they are running the show because they are very good at getting you to pay and as we have already discussed, this usually means behaving very erratic. Don’t waste your time with a manager.
3. Never make a deal without getting it in writing.
If you have been a longtime reader of this blog, you have heard this a million times. Yet, when the time comes, still some people tend to get flustered and agree to a payment plan over the phone. What do you think happens when you do this? Most of the time they will clean out your bank account and you will find there is nothing you can do because they will simply say, “Well, you owed the money”. You can’t sue them because you have no proof. Again, any agreements should be made in writing before you give a collector access to your bank account.
4. Debt collectors are more willing to negotiate on older debts
The next time a collector contacts you regarding a 10 year old debt, don’t be afraid to offer them a settlement of pennies on the dollar. Many collection agencies purchase old debts from various companies after the company has written off the debt. Therefore, even if the settlement amount may seem small, keep in mind that as long as the collection agency makes a return on their investment, they will be happy.
5. Collectors do not care about your situation
It’s difficult to make smart money decisions when you are emotionally tied to the situation. Collectors know this when they call you a “deadbeat”. You must detach your emotions from the situation and consider it in the same way collectors do: this is just a business transaction.
Come back soon for Part 2 of this series!
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Sunday, July 12th, 2009
Reader’s Question
Dear Ryan,
I did not give a debt collector my bank account number, but I saw they tried collecting from my account. Is there any other way for them to get my account information, legally? Or should I pursue legal actions against them?
My Response
Hi [name removed],
There are a couple of things you should do before pursuing legal action. First, you need to verify and be certain that it was actually this company that was attempting to collect from your bank account. I say this because unless you gave them your bank account information, there is no way they could have legally obtained it. Furthermore, they need your permission before they can take any funds from your account. Second, if you have determined that it was indeed this company, I would call them and yell at them for awhile about this issue. I would do this before pursuing legal action because lawyers aren’t cheap and you don’t want to be hasty about getting a lawyer and filing suit.
Hope this helps,
Ryan
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Sunday, May 17th, 2009
Reader’s Question
Dear Ryan,
I have an old Verizon bill for $44 that I didn’t know about. Verizon has sold the account to a collection agency. And the collection agency is listed on my credit report (they list Verizon as the original creditor) I have attempted to negotiate a payment in full for delete with the collection agency but they flat out refused. I have called Verizon and they informed me that the account no longer belongs to them and I should contact the collection agency.
I can still log on to the Verizon account website using my old log on. If I pay the bill on the Verizon website can I then dispute the collection account with the credit bureaus as “not my account” or “paid with original creditor”? If so will this then make Verizon add a paid collection account to my credit report?
My Response
Hi [name removed] -
While I like your creativity (which is usually required when improving your credit), I would not suggest doing this. It won’t work. The collection agency will eventually take your offer if you are persistent. Keep up the good work and don’t give up — you will eventually win
Best,
Ryan
Take Home Point
Persistence, persistence, persistence is the key to repairing bad credit! I know all too well (from experience) that dealing with collection agencies is about the most miserable activity on the planet. Nonetheless, I hope all of my readers will kindly keep in mind that being persistent is the one thing that will enable you to win!
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Thursday, February 26th, 2009
Reader’s Question
I have read on a couple of websites that asking a collection agency to delete an account once your willing to pay it in full does not mean that it will happen. How do you work around that once you’ve paid it off and they do not remove it. Is it also true that paying on an account that is old refreshes the date it is reported as bad?
Response
Hi [name removed] -
Good questions. While it’s true that collection agencies are under no legal obligation to remove the account once you’ve paid it, generally the collection agencies are only concerned with one thing: getting paid. They do not care about your credit score. In most cases, if you state in writing that you will pay the account in full if they agree (in writing) to remove the collection entry from your credit report, they will comply.
The key is to get everything in writing. Collection agencies do not want to go to court anymore than you do (regardless of what they say). Therefore, if a written agreement is established (i.e., pay in full for removal), its very unlikely they will fail to remove the entry. If you don’t have everything in writing, all bets are off and they won’t take the time to remove the entry.
Regarding your last question: Although rare, resuming payment on an old account can refresh the date. However, this is no reason to put off paying on an old account –if the date is reset, in most cases it’s very easy to get this removed by simply disputing it as inaccurate.
Hope this helps,
Ryan
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Wednesday, December 3rd, 2008
Reader’s Question
Hi -
I have several credit cards in varying stages of delinquency. How far behind does one typically have to fall, before a creditor is ready to accept a reduced settlement? And when do creditors typically give up and send the account to a collection agency?
Response
Hi there -
In my experience, credit card companies usually do not accept a settlement before the account has been handed over to a collection agency. This is particularly true for credit card companies. However, with that said, it’s not a bad idea to ask them if they’d be willing to work something out. Your number one goal ought to be to keep these accounts out of collections. Dealing with collection agencies is not a pleasant experience. Plus, you run the real risk of adding yet another bad entry on your credit report. Basically, creditors can send the account to collections whenever they see fit. I would, however, expect to see the account go to collections after it has been between 120 days and 150 days late.
Hope this helps,
Ryan
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